JAKARTA : Two South-East Asian central banks will likely add to the flurry of global tightening on Thursday (Sept 22), as policy makers in Indonesia and the Philippines seek to ease price and currency pressures.

The majority of economists in a Bloomberg survey expect Bank Indonesia to raise its benchmark interest rate by 25 basis points to a two-year high of 4%. Bangko Sentral ng Pilipinas is seen to deliver a half-point hike to take its policy rate to 4.25%, its highest since August 2019.

Central bankers in the two nations have signalled a readiness to act to quell inflation, which eased slightly in August but remains well above their 2%-4% target bands.

Both expect inflation to accelerate further in the coming months amid food shortages in the Philippines and higher fuel prices in Indonesia.

Their currencies have also been hit by the emerging-market sell-off, with the Philippine peso at a record low and the Indonesian rupiah falling past the psychological level of 15,000 a dollar.

Here’s what to watch out for in Thursday’s decisions: Indonesia Investors will look for forward guidance from Indonesia on how it will chart the pace and scope of its monetary normalisation without derailing economic recovery.

South-East Asia’s largest economy is contending with the ripple effects of a 30% price increase in its most widely-used fuels that threatens to send inflation near 7%.

Governor Perry Warjiyo (pic) had said inflation is not expected to return within the 2%-4% goal until the second half of 2023, as they monitor its potential impact to households and businesses.

"Bank Indonesia will be keen to tame inflationary expectations in light of the recent increase in subsidised fuel prices,” said Radhika Rao, an economist with DBS Bank Ltd.

"While the risk of a front-loaded and large rate hike cannot be discounted, incremental moves will help tighten financial conditions at a gradual pace so not to stymie a pick-up in credit activity.”

At the same time, Indonesia will be weighing the risks to its currency outlook amid more aggressive tightening from the Federal Reserve and other major central banks.

It launched its own version of Operation Twist in August that involves selling short-term bonds to boost yields, with the hope of luring foreign inflows to underpin the rupiah and tame imported inflation.

Record-high export earnings and a widening trade surplus -- thanks to its coal, nickel and palm oil shipments -- help provide support for Indonesia’s currency.

The rupiah has weakened 0.7% so far this second half of the year, among the smallest declines in Asia.

With the Philippines widely expected to lift its benchmark rate anew, focus will be on whether they will continue tightening monetary policy through the year.

BSP Governor Felipe Medalla earlier this month signalled readiness for as many as three more quarter-point rate hikes, depending on the Fed’s actions.

BSP has so far this year raised the key rate by 175 basis points in four moves. Still, rising import costs are aggravated by the peso’s fall to record lows this month amid expectations of aggressive Fed rate hikes.

While headline inflation dipped last month, it remained well above BSP’s 2%-4% target.

Core inflation -- which strips out volatile food and energy costs -- also quickened, suggesting broadening price pressures.

"These factors all point to a high possibility of another outsized rate hike,” said Sophia Ng, a currency analyst at MUFG Bank Ltd, who forecast a half-point increase Thursday.

Policy makers are expected to release updated price growth forecasts Thursday.

Analysts are on the lookout for comments on when inflation will peak as well as on the bank’s foreign-exchange intervention.

"Drivers of monetary policy going forward will continue to be dependent on inflation and the inflation outlook, on top of prospects of further rate hikes by the Fed,” said Ng, adding that there’s scope for the BSP to raise rates further this year.

  - Bloomberg